Unit 3 Discussion Board

Unit 3 Discussion Board
Traditionally, the BCG matrix is used to define the competitive position of a product or unit of the company and its prospects in the market. In fact, the BCG matrix helps to define the presumable market share and market potential of the unit and compare it to rivals. Such assessment may be very helpful, especially when companies have to take strategic decisions on their further development. At the same time, in case of the company that has the electronic and appliance unit located in different quadrants of the BCG matrix it is very important to take into consideration the findings of the matrix because it can help the company to define the strategic direction in its development and to choose the optimal way of development focusing on the development of either unit, which is the most prospective for the company. On the other hand, it is important to remember that the BCG matrix is a helpful but not the absolute tool that helps to define the strategic development of the company. What is meant here is the fact that the findings of the BCG matrix reveal the actual and prospective position of both units but they cannot fully reveal the real development of both units because the contemporary business environment and technologies change so fast that the introduction of some innovations can change the position of units consistently.

Reliance of findings

Basically, the findings made with the help of the BCG matrix are considered to be quite reliable. In fact, the matrix shows the relationships between the competitive position of a product or unit and its prospects in the market. In this respect, it is important to lay emphasis on the fact that the development of the BCG matrix normally leads to the four options, which define the prospects and competitive position of the product, including stars, cash cow, question mark or problem child, and dogs. Either option characterizes the market development and competitive position of a product or unit. These four options allow the company to get the basic information on the market and competitive position of a product or unit to assess its prospects and build up a business strategy.
At the same time, it is worth mentioning the fact that the four options cannot always mirror the full range of the market development and position of a product or unit in the market. What is meant here is the fact that often additional, in-depth analysis is needed to make the findings made in terms of the BCG matrix reliable enough to use in the development of a business strategy or business plan. In this regard, the BCG matrix’s findings should be viewed as important, reliable but not absolute source of information that can be used by companies to develop their business strategy and marketing strategy. Companies should be aware of the fact that they have to take into consideration numerous factors that may affect their marketing performance and the BCG matrix is not the universal method that works always effectively.

Implications of the findings

In this regard, it is possible to refer to the findings of the BCG matrix of the company, which electronic unit is located in the right upper quadrant and which appliance unit is located in the left lower quadrant. The location of the electronic unit in the right upper quadrant means that the electronic unit is a star. According to BCG matrix, a star is a unit that has a large market share in a fast growing industry. This means that the electronic unit has great prospects because it has a strong position at the moment and the industry keeps growing that opens new prospects for the further, ongoing market expansion and increase of the company’s market share. On the other hand, it is important to remember that the fast growing market implies the emergence of competitions that is particularly dangerous in relation to the electronic market. In fact, the development of the electronic market is vulnerable to the introduction of innovations which can affect consistently the development of the market and change the situation in the market completely. Nevertheless, the company can invest in the development of its electronic unit because it has good prospects, especially in comparison to its appliance unit. The appliance unit is a dog, according to BCG matrix, which implies that this is a business unit that has a small market share in a mature industry. On the one hand, this unit has little prospects to grow and expand its market share. On the other hand, the industry is mature and stable that allows the company to maintain a stable performance of the unit.

Recommendations

In such a situation it is possible to estimate that the electronic unit proves to be more prospective but investments in this unit may be quite risky, whereas the appliance unit is less prospective but investments in this unit are safe, although with a low return on investments. Therefore, the company should maintain its appliance unit but it should pay a particular attention to the development of the electronic unit because it can bring high returns on investments. At the same time, the company should use other tools to assess market position and competitive position of its units.

Other measurements to be used

In actuality, it is possible to use SWOT analysis and Porter’s five forces analysis as alternatives to BCG matrix. To put it more precisely, SWOT analysis and Porter’s five forces analysis can back up the BCG matrix because they reveal the strengths and weaknesses of the company and external threats and opportunities. In addition, they allow to assess the competitive situation in the market at the moment.


Conclusion
Thus, taking into account consideration all above mentioned, it is important to lay emphasis on the fact that the BCG matrix is an effective but not sufficient tool to assess the market share and competitive position of units. Therefore, additional, in-depth analysis is needed to obtain reliable results.

References:

Peters, T. J. (2002). In search of excellence: Lessons from America's best-run companies. New York: Harper & Row.
Pine, J. and Gilmore, J. (1999). The Experience Economy, Boston: Harvard Business School Press.
Robbins, H. and Finley, M. (1995). Why Teams Don’t Work: What Went Wrong and How to Make it Right. Princeton, N.J.: Peterson’s/Pacesetter Books.

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